MIGA issued guarantee coverage to Société Nationale de Télécommunications du Senegal (Sonatel), a Senegalese company, for its $18 million equity investment in Ikatel SA of Mali. The 15-year coverage provides protection against the risks of expropriation, war and civil disturbance, and breach of contract. MIGA is also providing coverage for an eight-month bridge loan of $26 million. The guarantees total $39.6 million.
Mali is one of the world's poorest countries, ranked 153 out of 162 countries in the 2001 Human Development Index. A landlocked country, more than half of which is desert, Mali has limited natural resources and tends to rely on two volatile commodities, cotton and gold, for export income. The country's low rate of teledensity has adversely affected economic growth.
The project will help provide various telecommunications services, including fixed lines, wireless, Internet, and satellite communication services, as well as public pay phones. It will also establish the country's first fully digital GSM cellular network, which is expected to improve the quality and efficiency of mobile phones. Ikatel aims to reach 250,000 subscribers through the project over the next nine years. The undertaking is consonant with Mali's development goals, as well as the World Bank Group's Country Assistance Strategy, which advocates increased private sector participation in key sectors, such as telecommunications.
The project represents one of the largest foreign investments in Mali and is expected to offer many development benefits. It will spur the growth of several industries, including small businesses and microenterprises, many of which will provide phone services to those who cannot afford a phone. Consumers will benefit from the diversity of service offerings and lower costs. The project will also generate government revenues in the form of taxes and fees, including a $44 million license fee, which has already been paid. Ikatel plans to directly employ some 200 local staff and should indirectly generate thousands of additional jobs. Other benefits include staff training and a program that involves building affordable housing for employees. The project will also provide new technology to schools, in addition to contributing to local charities and sponsoring regional cultural and sports events.